Sept. 20 (Bloomberg) — Is there a town in the world with a reputation worse than Medellin's?

Colombia's second-biggest city has a rep so bad that it has almost become a parody of itself. In the HBO series "Entourage," the characters are obsessed with capturing the evil of Pablo Escobar in a film called "Medellin," chronicling his rise to head the drug cartel that ruled the city.

To most U.S. citizens those three syllables are code for all that is wrong with Latin America — the lawlessness, the drugs, the delusion that a network of thugs substitutes for a real economy.

Congress feels about the same way. A bilateral free trade agreement, or FTA, between the U.S. and Colombia is one of four such agreements that the Bush administration wants lawmakers to approve this autumn. Panama and Peru may get the nod, but Colombia, along with South Korea, is in doubt.

AFL-CIO labor union President John Sweeney has labeled Colombia a "gross human rights violator" and slammed President Alvaro Uribe for failing to halt murders of union leaders. House Speaker Nancy Pelosi shares his attitude. Their underlying hesitation is simple: If Medellin is in Colombia, then Colombia is too dangerous to trade with.

But maybe Medellin has changed. Travelers there recently with Commerce Secretary Carlos Gutierrez found a powerful turnaround that argued not only for endorsing the FTA, but also taking a second look at the region.

Escobar's Medellin

Medellin came into prominence in the 1980s, when Escobar made it the continent's cocaine capital. In his time and after, gang members ruled. Six Medellin policemen a day turned up dead. The overall death rate was 350 per 100,000, or 10 times that of the most dangerous U.S. cities, such as Baltimore. Kidnapping and gang wars devastated all other activity, such as the textile industry, or the construction of roads and sewers.

Locals who lived in the hillside shacks of the Santo Domingo section might want to walk to a job in the valley. But to do that they had to spend two hours picking their way down a rubble-strewn incline.

President Bill Clinton and lawmakers from both parties began to alter this picture when they passed a law to fund Colombia's demilitarization. Colombians did their part by electing Uribe president in 2002. Uribe demobilized tens of thousands of gangsters, persuading them to hand in their guns, confess to crimes and gave them stipends to begin civilian lives.

Reforming Mayor

Medellin contributed by choosing a reforming mayor, a mathematician with a doctorate from the University of Wisconsin named Sergio Fajardo. Fajardo worked hour by hour with police to recapture the city. He built libraries to show that gangs weren't the only ones who could help communities. Fajardo also found an ingenious way to transport the stranded hillside citizens — by ski lift. Today gondolas carrying eight passengers each sway up and down the hill on a wire — a commuter hypotenuse that changes the urban profile.

Fajardo says funding the concrete-and-wire Metrocable wasn't so hard: "It's remarkable how much money there is to spend when you don't keep it for yourself and your friends."

The result of it all is that murders in Medellin dropped. At 29 per 100,000, the city's homicide rate is lower than Baltimore's. New peace allowed legitimate businesses, such as fresh flowers and textiles, to expand in Medellin.

To be sure, the crime drop wasn't as dramatic in the rest of the country. And the men on the stipends could take up arms again. Colombia's progress is far from irreversible.

Approval Needed

To complete the turnaround, Colombia needs more trade with the U.S. The FTA would help by making permanent tariff reductions that currently require periodic renewal. Today, textile producers suffer in their competition with China because import tariffs are so high. The FTA would cut those. In Colombia, lawmakers have already done their part by approving the agreement Uribe has negotiated with the U.S.

In short, Colombians are not asking for this trade agreement — they are begging for it. To them it is Washington that seems delusional.

"Give us this FTA opportunity," one of the demobilized men says to Americans on the Gutierrez trip. Inaction by the U.S. "would hurt us," Fajardo says.

Instead, Pelosi publicly scolded Uribe when he visited the U.S. last spring. Other Democrats are choosing to listen to those AFL-CIO warnings, even though union leaders from Colombia's private sector support the FTA. They acknowledge the deaths, but don't believe Uribe is responsible for them. The opponents to the FTA are public-sector union workers, whose jobs are least likely to be affected by an FTA.

Filling the Vacuum

Only someone as cynical as an HBO character would deny the obvious: Congress ought to endorse Colombia's progress now and adopt the FTA. Once the new year starts the presidential primaries will preoccupy Americans, and Colombia's FTA wannabes will have to wait at least 12 more months for change. Disillusionment will grow.

The fading of Fidel Castro is producing a power vacuum in Latin America, notes Senator Robert Bennett of Utah, part of the bipartisan delegation that traveled with Gutierrez. The U.S. can fill that vacuum.

"If we withdraw, Hugo Chavez fills the vacuum, and Chavez is Castro with oil," Bennett says. To ignore Medellin is to script our way to another series — "Heartbreak Hemisphere."

(Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations, is a Bloomberg News columnist. The opinions expressed are her own.